Foreclosures fall in Virginia, but recovery stalls in Maryland

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Photo - (Photo: Thinkstock)
(Photo: Thinkstock)
Local,Maryland,Virginia,Taylor Holland,Prince Georges County

Old Town Manassas, once the face of the Washington region's foreclosure crisis, is now enjoying a resurgent housing market despite the weak economy. But across the Potomac in Maryland, the recovery in places like Prince George's County has been decidedly slower.

The contrast in fortunes, experts say, is the result of the drastically different approaches Virginia and Maryland officials took as the housing market crumbled five years ago. Virginia officials opted to let the foreclosure crisis play out quickly even if that meant more foreclosures, while Maryland officials enacted laws that delayed foreclosures with the intention of protecting homeowners.

Maryland's policy took foreclosures that would have happened in 2010 and 2011 and pushed them to 2012 and 2013, according to RealtyTrac Vice President Daren Blomquist. "It delayed a lot of necessary and inevitable foreclosures," he said.

Foreclosures
2012 2011 2010 2009 2008
Manassas City 1,237 1,085 613 369 262
Prince George's 13,299 18,852 15,704 5,823 5,321
Source: RealtyTrac

Houses in Virginia, whose valued dropped sharply between 2006 and 2009, are now selling more quickly and for more money. Maryland, meanwhile, saw a 114 percent surge in foreclosures since March 2012. Maryland homes can remain on the market much longer than those in Virginia, and the foreclosures, once delayed, are still dragging on there.

"I would count as many as 40 foreclosed homes on my 5-mile drive into work each morning," said Bob Chase, sales manager at Prospero's Books in Old Town Manassas. "Now, it's rare to see a 'For Sale' sign at all, and when you do, it's only up for about five days."

Longtime Manassas resident Ann Harrover Thomas said the area has gotten many new restaurants, a parking garage and a host of other businesses in recent years.

"Everything's doing well," Thomas said. "The traffic is bad, and it's hard to find parking, but Manassas is booming and back to life."

During the peak of the crisis, median home prices in Manassas plunged from $363,272 in 2006 to $140,225 in 2009, while officials tallied 1,937 foreclosures, or one in every seven properties, in 2008.

But today along the historic town's streets, construction projects are underway, and the city's Heritage Railway and Fall festivals, which faded during the crisis, are reappearing. Homes are selling for an average of $220,000, and only one in every 954 homeowners still faces foreclosure.

In Prince George's County, meanwhile, "For Sale" signs and boarded-up properties still pepper the neighborhoods of some of the hardest-hit towns. Gwen Bowman, president of the Bradbury Heights Civic Association, said the foreclosure of 26 nearby apartments created a dangerous situation in her Capitol Heights community.

"People were using it as a dumping ground," Bowman said. "The people that lived closest, for them to see people going into the buildings and think about the things going on -- drugs, prostitution, who knows what else -- it was depressing."

The county eventually demolished the apartments, but others just like them remain.

The median home sale in Prince George's last year was $170,000. That's a slight improvement over $160,000 in 2011, but still only about half of what it was in 2006, before the crisis.

Thomas Lawler, a former senior vice president at Washington mortgage giant Fannie Mae, said the pace of recovery in Virginia and Maryland differs greatly because the two states pursued drastically different approaches to the problem.

"You can sit there and create legislation to make sure there will never ever be a wrongly done foreclosure, but the problem is not resolved quickly," Lawler said. "[Virginia's system] actually deals with the problem very, very quickly and lets the market adjust."

That's made all the difference for Manassas.

"Instead of hearing about foreclosures on a daily basis," Manassas City Mayor Harry J. Parrish II said, "we're hearing about more people moving in."

tholland@washingtonexaminer.com

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